{"id":19266,"date":"2025-03-26T20:46:37","date_gmt":"2025-03-26T20:46:37","guid":{"rendered":"https:\/\/dogewisperer.com\/?p=19266"},"modified":"2025-03-26T20:46:37","modified_gmt":"2025-03-26T20:46:37","slug":"bitget-ceo-slams-hyperliquids-handling-of-suspicious-incident-involving-jelly-token","status":"publish","type":"post","link":"https:\/\/dogewisperer.com\/?p=19266","title":{"rendered":"Bitget CEO slams Hyperliquid\u2019s handling of \u201csuspicious\u201d incident involving JELLY token"},"content":{"rendered":"
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\"Bitget<\/p>\n

Gracy Chen, CEO of cryptocurrency exchange Bitget, criticized Hyperliquid\u2019s handling of a March 26 incident on its perpetual exchange, saying it put the network at risk of becoming \u201cFTX 2.0.\u201d<\/p>\n

On March 26, Hyperliquid, a blockchain network specializing in trading, said it delisted perpetual futures contracts<\/a> for the JELLY token and would reimburse users after identifying \u201cevidence of suspicious market activity\u201d tied to the instruments.\u00a0<\/p>\n

The decision, which was reached by consensus among Hyperliquid\u2019s relatively small number of validators, flagged existing concerns about the popular network\u2019s perceived centralization.<\/p>\n

\u201cDespite presenting itself as an innovative decentralized exchange with a bold vision, Hyperliquid operates more like an offshore [centralized exchange],\u201d Chen said, after saying \u201cHyperliquid may be on track to become FTX 2.0.\u201d<\/p>\n

FTX was a cryptocurrency exchange run by Sam Bankman-Fried, who was convicted of fraud in the US after FTX\u2019s abrupt collapse in 2022.\u00a0<\/p>\n

Chen did not accuse Hyperliquid of specific legal infractions, instead emphasizing what she considered to be Hyperliquid\u2019s \u201cimmature, unethical, and unprofessional\u201d response to the event.<\/p>\n

\u201cThe decision to close the $JELLY market and force settlement of positions at a favorable price sets a dangerous precedent,\u201d Chen said. \u201cTrust\u2014not capital\u2014is the foundation of any exchange [\u2026] and once lost, it\u2019s almost impossible to recover.\u201d<\/p>\n

\"Bitget
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Source: <\/em>Gracy Chen<\/em><\/a><\/p>\n<\/figcaption><\/figure>\n

Related: <\/strong><\/em>Hyperliquid delists JELLY perps, citing \u2018suspicious\u2019 activity<\/strong><\/em><\/a><\/p>\n

JELLY incident<\/h2>\n

The JELLY token was launched in January by Venmo co-founder Iqram Magdon-Ismail as part of a Web3 social media project dubbed JellyJelly.\u00a0<\/p>\n

It initially reached a market capitalization of roughly $250 million before falling to the single digit millions in the ensuing weeks, according<\/a> to DexScreener.\u00a0<\/p>\n

On March 26, JELLY\u2019s market cap soared to around $25 million after Binance, the world\u2019s most popular crypto exchange, launched<\/a> its own perpetual futures tied to the token.\u00a0<\/p>\n

The same day, a Hyperliquid trader \u201copened a massive $6M short position on JellyJelly\u201d and then \u201cdeliberately self-liquidated by pumping JellyJelly\u2019s price on-chain,\u201d Abhi, founder of Web3 company AP Collective, said<\/a> in an X post.<\/p>\n

BitMEX founder Arthur Hayes said initial reactions to Hyperliquid\u2019s JELLY incident overestimated the network\u2019s potential reputational risks.<\/p>\n

\u201cLet\u2019s stop pretending hyperliquid is decentralised. And then stop pretending traders actually [care],\u201d Hayes said<\/a> in an X post. \u201cBet you $HYPE is back where [it] started in short order cause degens gonna degen.\u201d<\/p>\n

\"Bitget
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Binance launched JELLY perps on March 26. Source: <\/em>Binance<\/em><\/a><\/p>\n<\/figcaption><\/figure>\n

Growing pains<\/h2>\n

On March 12, Hyperliquid grappled with a similar crisis caused by a whale who intentionally liquidated a roughly $200 million long Ether (ETH<\/a>) position.\u00a0<\/p>\n

The trade cost depositors into Hyperliquid\u2019s liquidity pool, HLP, roughly $4 million in losses after forcing the pool to unwind the trade at unfavorable prices.\u00a0Since then, Hyperliquid has increased collateral requirements<\/a> for open positions to \u201creduce the systemic impact of large positions with hypothetical market impact upon closing.\u201d\u00a0<\/p>\n

Hyperliquid operates the most popular leveraged perpetuals trading platform, controlling roughly 70% of market share, according to a January report by asset manager VanEck.\u00a0<\/p>\n

Perpetual futures, or \u201cperps,\u201d are leveraged futures contracts with no expiry date. Traders deposit margin collateral, such as USDC, to secure open positions.<\/p>\n

According<\/a> to L2Beat, Hyperliquid has two main validator sets, each comprising four validators. By comparison, rival chains such as Solana and Ethereum are supported by approximately 1,000 and 1 million validators, respectively.\u00a0<\/p>\n

More validators generally lessen the risk of a small group of insiders manipulating a blockchain.\u00a0<\/p>\n

Magazine: <\/strong><\/em>What are native rollups? Full guide to Ethereum\u2019s latest innovation<\/strong><\/em><\/a><\/p>\n